Initial Exchange Offerings or IEOs have become a buzzword amongst crypto enthusiasts in 2019 with many hoping that the advent of IEOs will herald the next bull run. Whether or not IEO mania will equal or exceed that of the ICO frenzy of 2017 waits to be seen. This article is going to look at what an IEO is and how we got to this stage.
What is an ICO?
Before there was an Initial Exchange Offering there was the Initial Coin Offering. At the peak of ICO mania, tens of billions of dollars of funding was raised for a wide range of projects. Some of which have gone on to be giants of the crypto space and many that were clearly scams or failed due to poor management. Anyone could hold an ICO and quite frequently the hype surrounding project did not in any way match the fundamentals of the project. By trading mainly Ether and Bitcoin for newly minted alt tokens thousands of projects launched and the total market cap of all coins rose to nearly a trillion dollars.
The path to regulation
However, following the unprecedented meteoric rise of ICOs in 2017 they dropped off in popularity massively in the latter part of 2018. As this decline occurred governments around the globe started to ask questions about the legal and regulatory future of these Initial Coin Offerings.
With the advent of the ICO, raising finance had never been so easy and at the height of the late 2017 altcoin mania, an estimated 80% of the offerings were identified as scams within that same year. Regulators had to take notice of this nascent industry and whilst they were painfully slow to roll out official guidelines eventually some decisions were made and tokens legal status started to become clearer.
The United States Securities and Exchange Commission (SEC) eventually released its much anticipated “Crypto Token Framework.” However, it received criticism for the wide range of questions left unanswered and left many feeling that certain issues required much further discussion. For all of the criticisms levelled against the Crypto Token Framework, it did represent a step in the right direction. It was a start to a clear regulatory framework and at this early stage, it is still not completely clear what its impact will be on both the ICO and IEO scene.
What is an IEO?
Initial Exchange Offerings have emerged from the space once occupied by the Initial Coin Offering. They are being marketed as an improvement over the traditional ICO, which they certainly are offering many notable advantages. However, they are not without risk. Some of this risk now lies with the intermediary exchange offering the IEO on their platform.
Initial Exchange Offerings (IEO’s) have emerged out of the crawling pace of ICOs over the last several months — seemingly improvements over the traditional ICO. While IEOs do offer some noticeable advantages, they also still have the caveat of trusting intermediaries who have proven themselves prominent players in the ‘Dark Underbelly of Cryptocurrency Markets.’
Finish this article at https://www.ieomagazine.com
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